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Pension Plan Entries Yuri Co. operates a chain of gift shops. The company maintains a defined contribution pension plan for its employees. The plan requires quarterly installments to be paid to the funding agent, Whims Funds, by the fifteenth of the month following the end of each quarter. Assume that the pension cost is $157,100 for the quarter ended December 31.

Journalize the entry to record the accrued pension liability on December 31.

2 Answers

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Final answer:

The journal entry for Yuri Co.'s accrued pension liability on December 31 would be a debit to Pension Expense for $157,100 and a credit to Pension Liability for $157,100. This reflects the quarterly pension cost and the company's obligation under their defined contribution pension plan.

Step-by-step explanation:

To journalize the entry to record the accrued pension liability on December 31 for Yuri Co., you must recognize the pension expense for the period and the corresponding liability. Since the pension cost for the quarter ended December 31 is $157,100 and the company is required to pay this to the funding agent, Whims Funds, by the fifteenth of the following month, you need to account for this liability at the end of the quarter.

The journal entry would be:

  • Debit Pension Expense $157,100
  • Credit Pension Liability $157,100

This entry reflects the company's obligation to pay the pension plan installment. Defined contribution plans, like 401(k)s and 403(b)s, involve the company contributing a fixed amount to the employee's retirement account regularly. This is part of the changing landscape of retirement planning, making these contributions crucial to the future financial stability of retirees.

User Ghazyy
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Answer and Explanation:

The journal entry is shown below:

On Dec 31

Pension expense $157,100

To Unfunded pension liability $157,100

(Being the quarterly pension cost is recorded)

here the pension expense is debited as it increased the expense and credited the unfunded pension liability as it also increased the liabilities

So, the above journal entry should be recorded

User SushiHangover
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4.3k points